Chairman of Indonesian Investment Coordinating Board (BKPM) Speaks on Potential Investment to Business Groups in the United States

2/25/2010

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On Thursday (25/2), Chairman of BKPM, Gita Wiryawan, facilitated by the Consulate General of the Republic of Indonesia in New York, have conducted an simultaneous event in New York City comprised of meeting with the President of Asia Society and discussion with several business groups under the Business Council for International Understanding (BCIU) New York. This event was a part of the Chairman of BKPM working visit to the U.S. to promote Indonesia’s image through sharing of views and information between the Indonesian government and business groups in the U.S.

The meeting with the President of Asia Society, Vishakha Desai, was also attended by its executive board, the Chairman of American-Indonesian Chamber of Commerce, Wayne Forrest, as well as a number of private sectors’ representatives. In the meantime, the discussion with BCIU, was attended by representatives of Chartis, J.RayMcDermott, Trans Pacific Partners, Morgan Mayfair Global Advisors, Deloitte, and Financial Services Volunteer Corps.

On both meeting, the Chairman of BKPM in general addressed positive changes happened in Indonesia, particularly on how Indonesia survived the crisis and rebuilt its economy again. At this point, Indonesia has become a democratic country that continuously moves toward modernization. The political process also signals that Indonesia is vigorous and could endure the democracy diynamics.

In regards to potential investment in Indonesia, there are at least 3 main sectors, i.e. energy (conventional as well as renewable energies), food, and infrastructure. Until recently, food production in Indonesia has accomplished the level of marginal productivity, but the presence of foreign investments will certainly increase the productivity of sugar, rice, and palm oil. In comparison to investments on energy and infrrastructure, investment in food sector requires relatively less capital. In infrastucture sector, the Chairman pointed out China’s success story in increasing the number of roads that leads to a vast increase in GDP. Nowadays, the number of road’s kilometers in China has preceded Canada and the U.S. in the near future.

Besides, Indonesia’s fiscal and monetary are also in a stable condition now, as result of the implementation of various prudent policies. Debt ratio has significantly decreased to 28-29 percent of GDP. Government budget allocated mainly on education and infrastructure sectors counted for 20 percent of the budget. Education sector is expected to be one of Indonesia’s soft power instruments in the future because Indonesia hosts not only abundant natural resources, but also prodcutive workers that counted for 60 percent of the population.

During the discussion session, the Chairman mentioned that the government has been focusingn on the promotion of Indonesia’s image as a country no longer unconstrained by corruption, ineeficiency, and natural disasters. It should be acknowledged that the enhancement of rule of law and the improvement of judicial system will not happen just in seconds. Nevertheless, Indonesia has a strong willingness to improve the condition by promoting a clean government.

Despite of some negative images attached to Indonesia, there are a number of countries that continue to maintain their investments in Indonesia. These loyal investors that are parts of the ASEAN+, such as Singapore, Malaysia, Japan, and Korea, are not easily affected by perceived image of Indonesia. These countries understand the business culture in Indonesia because they share the relatively similar culture with Indonesia. On the second layer, there are China and other countries with abundant natural resources like Middle East countries. On the last layer, there are the U.S., European Union, and other developed countries that highlighted the importance of contract and the medium to solve any disputed or violated contract.

As a part of the strategy for image building, BKPM is trying to create a direct communication network. Investment promotion rather than be done through public cultural performance and food feast, now it should be done through limited dialogues and discussions directly with the stakeholders that will take part in the image building of Indonesia on 5 to 10 years to come. The main target is to improve Indonesia’s position from number 122 to the 40 most favorable destination for investment and doing business. Apparently, one of the reason for this unpleasant position was the lack of communication regarding the improvements in deregulations and investment facilitations in Indonesia.

Various programs to promote Indonesia’s image is also the main focus of Indonesian embassy and consulates general in the U.S. In this regard, the Consulate General of the Republic of Indonesia in New York will continue to follow up on the idea to conduct integrated promotion programs in several cities in the U.S. These intergrated events should also serve as a means to grasp direct inputs from the entrepreneur in regards to their concerns toward the Indonesian government’s policies. (Source: Consulate General of the Republic of Indonesia in New York)